Sales:

Article 1458. by the contract of sale, one of the contracting parties obligates
himself to transfer ownership of, and to deliver a determinate thing, and the other
party is to pay thereof in price certain in money, or its equivalent.
A contract of sale may be absolute or conditional.
Nature of a Contract of Sale:
Absolute Contract of Sale
Conditional Contract to Sell
Characteristics of a Contract of Sale:
Consensual A contract is perfected by mere consent
Onerous The parties enter into a contract for their reciprocity of interests
Nominate A contract that has a name in law
Innominate A contract that has no name in law (I give what you may do, I do
what you may give)
Principal Can stand on its own.
Bilateral imposes obligation on both parties.
Commutative equal value is exchanged for equal value.
Elements of a Contract of Sale:
Consent A contract of sale is perfected by a mere consent. (1475)
Subject Matter In a contract of sale the subject matter must be determinate.
How is it to be considered determinate? (1460 A thing is determinate when it is
particularly designated or physically segregated from all others of the same class.)
Consideration As to the seller the consideration is the price certain in money or
its equivalent. As to the buyer the consideration is the object or the Subject matter.
Obligation arises from:
Law, Contracts, Quasi-Contracts, Delicts, Quasi-Delicts
Stages of a Contract of Sale:
Preparation/Negotiation this a mere offer to sell
Perfected A contract of sale is perfected at the moment there is meeting of
minds upon the thing which is the object of the contract and upon the price.
Performance transfer of ownership of, and to deliver the determinate thing.
Consummated Transfer and delivery had been consummated.
DISTINGUISHED FROM OTHER CONTRACTS:
1.

Donation
donation is gratuitous; sale is onerous
donation is formal contract; sale is consensual
donation is governed by law on donation; sale is governed by law on sales

2.

Barter
in barter, the consideration is the giving of a thing; in sale, it is giving of
money as payment
both are governed by law on sales; both are species of the genus sales
if consideration consists party in money & partly by thing - look at manifest
intention;
if intention is not clear (1468):
a. value of thing is equal or less than amount of money - sale
b. value of thing is more than amount of money - barter
Fule v. Court of Appeals The exchange of diamond ring and earings in
consediration of a money plus a lot.
3.
Contract for piece of work
test in article 1467:
a. contract for delivery of an article which the vendor in the ordinary course of
business manufactures or procures for general market (whether on hand or
not) - sale
b. goods are to be manufactured specially for a customer and upon special
order and not for the general market - contract for piece of work.
Jurisprudence:
Habituality test - enunciated in Celestino v CIR; contract of sale if
manufacturer engages in activity without need to employ extraordinary skills and
equipment; contract for piece of work is sale of service; contract of sale is sale of
things.
Main factor in decision of the SC: essence of why parties enter into it:
a.
essence is object - contract of sale
b.
essence is service - contract for piece of work
4.

Agency to sell
-

in sale, buyer pays for price of object; in agency to sell, agent not obliged
to pay for price, merely obliged to deliver price received from buyer.
in sale, buyer becomes owner of thing; in agency; principal remains owner
even if object delivered to agent
in sale, seller warrants; in agency, agent assumes no risk/liability as long
as within the authority given
in sale, not unilaterally revocable; in agency, may be revoked unilaterally
because fiduciary & even if revoked w/o ground
in sale, seller receives profit; in agency, agent not allowed to profit

TEST: essential clauses of whole instrument (Article 1466)

Agency is a personal contract; sale is a real contract (to give) - rescission is
not available in agency.

Quiroga v. Parsons the court ruled that it is a contract of sale, for there is a
payment over the supplier in a installment basis and not acting as a mere agent.
5.

Dacion en pago
dacion: contract where property is alienated to satisfy/extinguish obligation to
pay debt
in dacion: novates creditor-debtor relationship into seller-buyer
in dacion: delivery is required (real contract)
6.

Lease
-

in sale: obligation to absolutely transfer ownership of thing; in lease: use

of thing is for a specified period only with an obligation to return
- in sale: consideration is price; in lease: consideration is rent
- in sale: seller needs to be owner of thing to transfer ownership;
- in lease: lessor need not be owner
lease with option to buy: really a contract of sale but designated as lease in name
only; it is a sale by installments.
Luzon Brokerage v. Maritime Building
Consent of the Contracting Parties:
Article 1489 Where necessaries are sold and delivered to a minor or other person
without capacity to act, he must pay a reasonable price therefor.
Article 1390 Voidable Contracts valid until annulled. Those where one of the
parties is incapable of giving consent; Those where the consent is vitiated by
mistake, violence, intimidation, undue influence or fraud.
Rodriguez v. Mactal When one of the parties is incapable of giving consent and
he thus benefited to the thing or sale then it is deemed valid. (1399)
Mapalo v. Mapalo The real intention of the party is a donation of a half portion of
the land, when the other party executed a deed of absolute sale of the whole parcel
of land then fraud is present.
Article 1403 Unenforceable Contracts valid until ratified. Those who have no
authority acted beyond his powers; Those that do not comply with the Statute of
Frauds; Those where both parties are incapable of giving consent.
Parties that are disqualified:
Absolute Articles 1327 1328 Insane or demented persons, and deaf-mutes
who do not know how to write. Contracts entered to during lucid interval is valid.
State of drunkenness or during a hypnotic spell are voidable.
Relative :
Article XII Section 7 and 8 Foreigners, Those who are natural-born citizen and
lost their citizenship.

Articles 1490-1492 Husband and Wife expect there is a separation of property

upon in the marriage settlements; Or there has been a judicial separation of
property.
- Guardians, Agents, Executors and administrators of the property.
- Public Officers and employees
- Judges, Justices, Attorneys which may be the object of any litigation in
which they may take part by virtue of their profession.
Rubias v. Batiller A sale of property under litigation. The contract is voidable.
Subject Matter (things and rights)
- Must not be outside the commerce of man
- Must be licit or legal and have a right to transfer ownership (1459)
- Future things can be a subject matter (1347, 1462)
- Sale of a mere hope or expectancy (1461)
- Must be a determinate thing (1460)
Martinez v. CA a lot located near the streams is considered a public domain and
it is outside the commerce of man then the subject matter cannot be a object of a
sale.
Melliza v. City of Iloilo A donation compared to Sale, in terms of subject matter
a donation may be indeterminate, while in sale it must be determinate.
Cause or Consideration:
Under 1469 a price certain in money a price may be considered certain, with
reference to another thing certain, or that the determination thereof be left to the
judgment of a specified person or persons.
1471 If the price is simulated, the sale is void, but the act may be shown to have
been in reality a donation, or some other act or contract.
1473 A fixing of price can never be left to the discretion of one of the contracting
parties. However, if the price fixed by one of the parties is accepted by the other,
the sale is perfected.
1474 If a price cannot be determined in any other manner, the contract is
inefficacious. But if the thing has been delivered the buyer shall pay a reasonable
price.
Earnest Money shall be considered as part of the price and as proof of the
perfection of the contract. (1482)
Gross inadequacy of price does not affect a contract of sale, except as it may
indicate a defect in the consent. (1470)(1355) Lesion suffers economic price.
Villonco Realty Co v. Bormaheco Earnest money was accepted then there is a
perfected contract of sale.
Spouses Doromal v. CA The right of the co-owners to legal redemption of the
sold property. When it appears in the deed of sale the price was P30,000 then it is
the price that binds a third person.
Goldenrod v. CA in terms of reccission of the contract of sale, earnest money
must be returned.

Morales Devt Co. V. CA A sale of a certain land for a consideration of P1.00 is a

valid one, unless the consent is vitiated.
Laperal v. Rogers The inadequacy of price was obtained because there is a
undue influence during the Japanese war, then there is a vitiated consent. It is a
voidable contract.
De Leon v. Salvador When a court has the jurisdiction over the subject matter
and it is deem in the custodial egis of a court, another court with con-current
jurisdiction cannot interfere over the said matter.
Velasco v. CA The manner of payment of the purchase price is an essential
element in the formation of a binding and enforceable contract of sale.
Contract to Sell as distinguish from Contract of Sale:
(1)In a contract of sale, the title to the property passes to the buyer upon the
delivery of the thing sold. In a contract to sell, on the other hand, the
ownership is, by agreement, retained by the seller and is not to pass to the
vendee until full payment of the purchase price.
(2)In the contract of sale, the buyers non-payment of the price is a negative
resolutory condition; in the contract to sell, the buyers full payment of the
price is a positive suspensive condition to the coming into effect of the
agreement.
(3)In the first case, the seller has lost and cannot recover the ownership of the
property unless he takes action to set aside the contract of sale. In the
second case, the title simply remains in the seller if the buyer does not
comply with the condition precedent of making payment at the time specified
in the contract.
Conditional Sale - the only difference to contract to sell is that the happening of
which automatically transfer ownership and extinguish obligation. While in contract
to sell the happening of which arises an obligation to transfer ownership thereof.
McCullough & Co. V. Berger - the arrival of the tobacco in New York in good
condition was a condition precedent to the completion of the sale.
Luzon Brokerage v Maritime Building - In contracts to sell, where ownership is
retained by the seller and is not to pass until the full payment of the price, such
payment is a positive suspensive condition, the failure of which is not a breach,
casual or serious, but simply an event that prevented the obligation of the vendor to
convey title from acquiring binding force. There was only a casual breach is to
proceed from the assumption that the contract is one of absolute sale, where nonpayment is a resolutory condition.
Portic v. Cristobal - the memorandum of agreement between the parties show the
real intention of the parties whether it is contract to sell or contract of sale.

Heirs of Mascunana v. CA - the condition in the deed that the balance shall be
paid as soon as the property sold shall have been surveyed in the name of the
vendee and all papers pertinent and necessary to the issuance of a separate
certificate of title in the name of the vendee shall have been prepared is not a
condition which prevents the efficacy of the contract of sale.
Ursal v. CA - A contract to sell does not transfer ownership to the vendee, the
vendor can exercise rights over the property but a breach of contract to a
prospecting buyer will be held liable to damages. Contract to sell is a bilateral
contract whereby the prospective seller, while expressly reserving the ownership of
the subject property despite delivery thereof to the prospective buyer, binds himself
to sell the said property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
Keppel Bank v. Adao - A certain debtor of Keppel Bank paid his obligation through
dacion en pago, whereby the debtor transfers his 25 properties to the Bank.
Afterwards the bank discovered Adao occupying some of the properties and ask to
vacate the said properties, upon refusal of Adao, the bank filed a ejectment case to
Adao leave the premises before the MTC, the contention of Adao that there is a
perfected contract of sale by him and the said debtor, thus the Supreme Court held
that the said contract was only a contract to sell which retains the ownership of the
vendor upon full payment of the purchase price.
Natural Elements:
1. Warranties - to warrant the thing which is the object, warrant against
eviction and against hidden defects.
2. Subrogation - the seller shall have the rights over the objects for which he
passes to the buyer those rights. (stepping into the shoes of the others)
(please correct me if im wrong.)
Accidental Elements - likes terms and conditions between the buyer and the
seller.
1475 - the contract of sale is perfected at the moment there is a meeting of minds
upon the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.
1476 - In the case of a sale by auction:
(1) sale by auction of lots
(2) Sale by auction is perfected when the auctioneer announces its perfection
(3) A right to bid may be reserved expressly by or on behalf of the seller.
(4) Unlawful bidding by the seller.

1479 - A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissor if the promise is supported by a consideration
distinct from the price.
Cruz v. Fernando - it was held that it is a mere offer to sell of the rear portion of the
land, and not a contract of sale which is binding to the parties.
Contract of Option - (1479)
1324 - When the offerer has allowed the offeree a certain period to accept, the
offer may be withdrawn at any time before acceptance by comunicating such
withdrawal, except when the option is founded upon a consideration, as something
paid or promised.
Sanchez v. Rigos - An option to sell is not binding to the parties without any
consideration distinct from the price, but if the option to sell was accepted by the
buyer before it was revoked by the offerer then it is now a bilateral obligation. A
perfected contract of sale.
Equatorial Realty v. Mayfair Theater Inc. - A right of first refusal is distinct
from offer to sell. It is the right of the leasee to be first considered in case the leasor
will sell his property. It is distinct from a offer to sell which is not binding to the
parties in case there is no consideration distinct from the purchase price, here the
contract between the leasee and the leasor are binding to the parties that the
leasee has a right of first refusal.
Formalities of Contract of Sale (Statute of Fraud):
1483 - a contract of sale may be made in writing, or by word of mouth, or partly in
writing and partly by word of mouth, or may be inferred from the conduct of the
parties.
1403 - those who do not comply with the Statute of Frauds has no binding force as
to the court. Enforceable Contracts.
1625 - An assignment of a credit, right or action shall produce no effect as against
third persons, unless it appear in a public instrument, or the instrument is recorded
in the Registry of Property in case the assignment involves real property. (This will
not effect the contract of sale void, being in public instrument in a contract of sale is
for their convenient and as to bind third parties.) exception Cattle Registration Act.
Paredes v. Espino - a mere memorandum can also be considered formal or
authentic as a contract or being complied with the Statute of Frauds.
Inigo v. Maloto - Statute of Frauds are only applicable to an executory contracts
not to a partly or consummated contracts.

Cuyugan v. Santos - the statute of frauds does not stand in the way of treating an
absolute deed as a mortgage, when such the intention of the parties, although the
agreement for redemption or defeasance rests wholly in parol, or is proved by parol
evidence. The courts will not permit the statute to be used as a shield for fraud, or
as a means for perpetrating fraud.
Dalion v. CA - Contract of sale, perfected by mere consent. No particular form is
required for its validity. The necessity of a public instrument provided for in Article
1358 is only for convenience, not for validity or enforceability. It is not a
requirement for the validity of a contract of sale of a parcel of land that this be
embodied in a public instrument.
Rights and Obligations of the Vendor
1495 - the vendor is bound to transfer the ownership of and deliver, as well as
warrant the thing which is the object of the sale.
General Rule: Only the owner can transfer ownership thereof. The buyer has no
better title to the goods than the seller.
Exception to the rule:
(1) the provisions of any factors acts, recording laws, or any other provision of
law enabling the apparent owner of goods to dispose of them as if he were
the true owner thereof;
(2) The validity of any contract of sale under statutory power of sale or under the
order of a court of competent jurisdiction;
(3) Purchases made in a merchants store, or in fairs, or markets, in accordance
with the Code of Commerce and special laws. (1505)
1506 - where the seller of goods has a voidable title thereto, but his title has not
been avoided at the time of the sale, the buyer acquires a good title to the goods,
provided he buys them in good faith, for value, and without notice of the sellers
defect of title.
1547 - In a contract of sale, unless a contrary intention appears, there is:
(1) An implied warranty on the part of the seller that he has a right to sell the
thing at the time when the ownership is to pass, and that the buyer shall from
that time have and enjoy the legal and peaceful possession of the thing;
(2) An implied warranty that the thing shall be free from any hidden faults or
defects, or any charge or encumbrance not declared or known to the buyer.
Cuison v. Remoto - Placida owned the land and sold the land to Remoto and took
possession over the property with a notarized deed of sale. On the other hand the
heirs of Placida sold the same property to Cuison. The court ruled that Cuison has

no better title than the seller since the seller was not the owner of the property
thereof then he got no better rights. No one can give what one does not have.
Estoppel -Articles 1431, 1433-1434